For most of the last decade, power purchase agreements in Serbia were evaluated on a single dominant variable: price. The lowest strike won, and everything else was secondary. Under CBAM, that logic breaks down. For energy-intensive exporters, the commercial value of a PPA is no longer defined by how cheap the electricity looks on paper, but by how reliably it delivers usable green electricity attributes across time, under grid stress, and under audit. In this new environment, price becomes a necessary condition, not a sufficient one.
The shift is subtle but profound. Industrial buyers no longer ask, “What is the €/MWh?” as their first question. They ask, “How does this power behave when the system is congested, when curtailment rises, and when our load profile diverges from generation?” Those questions are not theoretical. They determine whether a PPA stabilises CBAM exposure or amplifies it.
The core issue is shape. Industrial electricity demand in steel, aluminium, fertilisers, and cement is continuous, multi-shift, and seasonally skewed. Solar-heavy PPAs deliver most of their energy in a narrow midday window. Wind-heavy PPAs spread output across hours and seasons. Two PPAs with the same annual volume and the same headline price can have radically different economic outcomes once shape mismatch is priced honestly. A cheap solar PPA that forces the buyer to procure replacement power at night or in winter can end up being more expensive than a higher-priced wind PPA that aligns naturally with load.
This is why industrial PPAs must be evaluated on effective delivered cost, not nominal strike. Effective cost includes the strike price plus imbalance charges, plus replacement power during curtailment, plus the cost of managing compliance volatility. In Serbia’s current market conditions, these add-ons can quietly add €3–8 per MWh to the effective cost of a poorly structured PPA. Over 1–2 TWh per year, that difference is measured in millions of euros, not rounding errors.
Curtailment risk is the second decisive variable. In a congested or solar-saturated system, curtailment is not an exception; it is a design feature. A PPA that does not explicitly allocate curtailment risk leaves the industrial buyer exposed. If green electricity is curtailed, the buyer either loses the attribute or must source a replacement. Under CBAM scrutiny, that replacement must be credible. Each 1% of curtailment on a 2.0 TWh contract erases 20 GWh of eligible volume. At €70–90/MWh, that is €1.4–1.8 million per year of lost value, before compliance penalties or reputational damage.
Wind-heavy PPAs exhibit fundamentally different curtailment dynamics. Wind curtailment tends to be event-driven and localised, rather than daily and structural. This makes it easier to manage contractually. Solar-heavy PPAs often face chronic midday curtailment once penetration rises, which makes contractual protection both more complex and more expensive. Buyers who focus only on strike price discover this difference only after the PPA is operational.
Certainty is the third pillar. Under CBAM, buyers value variance reduction as much as average cost. A PPA that delivers 1.9–2.1 TWh consistently is more valuable than one that swings between 1.6 and 2.4 TWh depending on weather and grid conditions. Variance complicates emissions reporting, supplier audits, and customer communication. EU buyers increasingly penalise variance implicitly, through shorter contracts or price adjustments. Industrial PPAs that stabilise delivery protect margin even if they are not the cheapest in headline terms.
This is where aggregation becomes central. Aggregated PPAs bundle output from multiple assets—wind, solar, storage—and deliver a firmed volume to the buyer. Instead of exposing the buyer to hourly volatility, they expose the buyer to an annual or seasonal band with defined tolerance. The aggregator absorbs imbalance risk, curtailment smoothing, and market repositioning. For the buyer, this transforms electricity from a volatile input into a quasi-infrastructure service. That transformation has measurable economic value.
Proof is the final, often underestimated, element. Under CBAM, claims must withstand scrutiny. Buyers increasingly require auditable evidence that green electricity is delivered physically or via robust market mechanisms, not just certified nominally. PPAs that rely on weak attribution frameworks or that repeatedly require exceptions erode trust. Once trust erodes, procurement terms harden. Prices are revisited. Volumes are reallocated. Proof, therefore, is not an ESG add-on; it is a commercial requirement.
In Serbia, many early industrial PPAs were structured as financial hedges rather than delivery instruments. They worked when renewables were marginal. As penetration rises, these structures become fragile. Financial PPAs tied to single assets expose buyers to shape mismatch and curtailment without physical mitigation. Under CBAM, this fragility becomes visible and costly.
The CAPEX implications are often misunderstood. Buyers sometimes resist paying a slightly higher strike for a better-shaped PPA, viewing it as a cost. In reality, paying €5–10/MWh more for a wind-anchored or aggregated PPA can save €10–15/MWh in avoided imbalance, replacement, and compliance costs. Over a ten-year contract, the net present value difference is decisive. This is why sophisticated buyers increasingly treat PPA pricing as a portfolio optimisation problem, not as a spot-market comparison.
Grid delays sharpen the lesson. When grid upgrades slip by 12–18 months, PPAs tied to stranded assets fail to deliver. Buyers are forced into emergency procurement at unfavourable terms. Aggregated PPAs with diversified assets degrade more gracefully, maintaining partial delivery and preserving compliance narratives. In IRR terms, this resilience can preserve 100–200 basis points of equity return across the supply chain. For buyers, it preserves credibility.
The Serbian market is now at an inflection point. As CBAM pressure builds, industrial buyers will stop signing PPAs that look cheap but behave badly. They will gravitate toward contracts that deliver stability, even at a premium. This will create a bifurcation in the PPA market. On one side, commodity-style PPAs compete on price and suffer high volatility. On the other, infrastructure-style PPAs compete on deliverability and proof.
For Serbian exporters, choosing the wrong side of this divide is not just a procurement error; it is a strategic mistake. A poorly structured PPA can undermine CBAM compliance and erode customer trust for years. A well-structured PPA can stabilise emissions reporting, protect margins, and buy time for deeper process decarbonisation.
The strategic conclusion is straightforward. In the CBAM era, industrial PPAs are no longer about cheap power. They are about shape, certainty, and proof. Price still matters, but it sits behind these variables, not in front of them. Serbian exporters who continue to chase the lowest €/MWh will discover that they have bought volatility, not security. Those who invest in better-shaped, aggregated, and verifiable PPAs will find that the premium they pay is small compared to the competitiveness they preserve.
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